In a dramatic escalation of transatlantic tensions, the European Parliament has taken the decisive step of formally suspending the ratification process for its trade deal with the United States. This powerful move comes as a direct protest against former President Donald Trump's recent threat to impose 10% tariffs on European Union exports. The ultimatum is conditional upon the bloc agreeing to his controversial proposal to take over Greenland.
A Firm Stance Against 'Blackmail'
This suspension represents the most substantial material response the EU has mounted thus far to what several European leaders have openly labelled as economic blackmail. Bernd Lange, who chairs the European Parliament's influential trade committee, stated unequivocally that until the threats concerning Greenland are completely withdrawn, there will be no possibility for compromise on ratifying the US agreement. This deal had promised American businesses a new era of zero per cent tariffs on a wide range of industrial exports.
Lange did clarify that the EU's separate commitment to purchase $750 billion worth of energy from the US would remain unaffected by this decision. However, the overall diplomatic climate has soured significantly. In a telling sign of the deteriorating relations, European Commission President Ursula von der Leyen cut short her schedule. After addressing the parliament, she returned directly to Brussels to prepare for an emergency summit, foregoing a planned detour to Davos for a meeting with Trump.
Emergency Summit and Retaliatory Options
The emergency summit, scheduled for Thursday evening in Brussels, will convene to discuss the full spectrum of options available to the EU should President Trump follow through on his tariff threat. The potential countermeasures under consideration are severe and designed to act as a powerful deterrent.
- Retaliatory Tariffs: The EU is prepared to slap approximately €93 billion worth of tariffs on US exports entering the European market.
- The 'Nuclear Deterrent': Officials are considering the activation of a never-before-used legal instrument known as the anti-coercion tool. Originally conceived to counter coercion from nations like China, this mechanism would empower the EU to restrict US companies from accessing its lucrative single market.
In theory, this could target a vast array of American sectors, from major technology and cryptocurrency firms to aerospace manufacturers and agricultural producers. However, European policymakers are acutely aware that such actions could backfire, as consumers might balk at the resulting higher costs or restricted access to popular US services like Apple or Netflix.
Diplomatic Efforts and Mercosur Setback
Despite the hardening stance, the EU continues to pursue diplomatic channels in an effort to avert a full-blown trade war. Lange acknowledged the volatile situation, noting that "a lot could happen" before Trump's tariff deadline of 2nd February. "There are always day by day surprises coming from the White House," he remarked, highlighting the uncertainty.
While a conflict with the US would be highly damaging, the EU's strategy to diversify its trade partnerships suffered a simultaneous and serious blow. In a separate but closely watched vote, Members of the European Parliament (MEPs) voted by a razor-thin majority of just ten to refer the long-negotiated Mercosur trade deal with Latin American nations to the European Court of Justice.
This decision was met with widespread condemnation. Bernd Lange expressed his disappointment, while the European Commission labelled it "regrettable." German Chancellor Friedrich Merz echoed this sentiment, and the country's powerful automotive manufacturers, who stand to benefit from the agreement, denounced the parliamentary move.
Although the European Commission retains the power to implement the Mercosur agreement on a provisional basis—a tactic it employed with the post-Brexit UK trade deal—Lange issued a stark warning. He cautioned that if the Commission chose to proceed unilaterally, it would plunge the bloc into a "huge institutional conflict," pitting EU institutions against one another at a time of external crisis.
